CHAPTER 2 accounting information system

Question 1

what are the 2 types of transactions

Answer 1

1)cash transactions
2)credit transactions

Question 2

define cash transaction

Answer 2

cash payemnt are made/ received immediatley upon goods sold/purchase

Question 3

define credit transaction

Answer 3

credit transactions are made or received at a later date after purchase or sale

Question 4

identify the accounting cycle

Answer 4

stage 1 - identify and record
stage 2 - adjust
stage 3 - report
stage 4 - close

Question 5

state the accounting information system

Answer 5

1. source document
2. journal
3. ledger
4. trial balance
5. financial statements

Question 6

define source document

Answer 6

1. the original record of a transaction which provides the details of the transactions

Question 7

what does source document contain

Answer 7

source documents contain date, parties involved, value and description of the transaction

Question 8

define journal

Answer 8

journal is a daily record book containing transactions organised by date

Question 9

define ledger

Answer 9

a book that contains account which is a consolidation of all transaction relating to specific assets, liabilities, equity,income and expenses

Question 10

define trial balance

Answer 10

trial balance is a summary of the ending balances of each ledger account at a specified date

Question 11

what consits in financial statements

Answer 11

financial stements consisits of
1) financial performance
2)financial position

Question 12

define financial performance

Answer 12

a report on income, expenses and profit/losses over a period of time

Question 13

define financial position

Answer 13

a report of assets, liabilities and equity at a specified date

Question 14

state the 3 purpose of source document

Answer 14

1) provides proof that transactions have occurred
2) to help in audit,checking or future refernce
3) provide the information for the accurate recording of the transactions

Question 15

list the 7 source documents

Answer 15

1. reciept
   2.invoice
   3.credit note
   4.debit note
   5.remittance advice
   6.payment voucher
2. bank statement

Question 16

state the purpose of reciept

Answer 16

to acknowledge that payment recieved for good sold or service provided

Question 17

state the purpose of invoice

Answer 17

to inform credit customer the amount owed for the goods sold or r service provided on credit

Question 18

state the purpose of credit note

Answer 18

to inform credit customer the reduction in amount owed due to ocercharging or retrun of goods

Question 19

state the purpose of debit note

Answer 19

debit note to inform credit customer the increase in amount owed due to previous undercharging

Question 20

state the purpose of remittance advice

Answer 20

to inform the credit customer the payment of a specific invoice

Question 21

state the purpose of payment voucher

Answer 21

an internal document to support payment to credit supplier, must be supported by original suppliers invoice

Question 22

state the purpose of bank statement

Answer 22

a monthly record sent by the bank giving details of withdrawls and deposits. used to tally and check against the business records in the cash at bank account